tv Whatd You Miss Bloomberg February 12, 2020 4:00pm-5:00pm EST
way to protect yourself. done with thee days were texas gains 1.5% and we are grinding our way our wayo two tens of 1%? >> you tend to have the big update -- up days. it would be surprising to see up days.percent or 2% i do think the liquidity aspect is important. everyone will talk about the fed and the repo desk. i always go back to the corporations themselves. share buybacks are the largest source of investments right now. we go back to looking at different leaves. when you have a dip in the are veryompanies active putting a floor under how far we will dip. romaine: 90% of the incremental
dollars are coming through the buybacks. scarlet: great perspective. we had the closing bell ring. we're looking at gains on the day. dowrd highs for the s&p, and nasdaq. for the year, i am looking at a nasdaq that is of a .4%. romaine: this is quite an interesting rally. we talk about this idea that the u.s. is going to be the standout . it has outperformed some of the markets overseas. we did get record highs on the stoxx 600. it is the u.s. market that continues to outperform. >> given the u.s. market is adding to the market -- scarlet: that is a good question. it is something we will pose to shawn and mike. let's check in with our reporters. i am visiting -- revisiting a familiar theme with
a different angle. i've been looking at lots of different asset classes. we finally have stocks doing better than bonds. even though we have had more recently in february this rally for stocks, that was not initially the case. , up a little more than treasury note futures. as you were talking about, stocks are pretty overextended -- take a look at this chart between the s&p 500 and the 200 day moving average at the beginning of 2018. well above the 200 day moving average. very overextended. more than 10%. we are exactly at those levels, while above 10 percent above the 200 day moving average. there could be an interesting result from the bearish divergence. >> i am looking at shares of
lyft, which were plunging today. the 2020 guidance was a disappointment to analysts. wouldad been hoping lyft turn a profit sooner in light of .er's accelerated profit ft's chief executive officer says the company is narrowing its focus. we really want to win product innovation and customer service, not on things like coupons or incentives. >> today, i am looking at developments and activity in the options market. this comes courtesy of a great note from goldman sachs. it was highlighting at the end of 20, the options hit a new record. it has gone up 77%. just knowing the notional value,
getting it up quickly is if it a lot of the activity is taking place. they highlighted a bunch of stocks. amazon, tesla and microsoft. where you are seeing call ratios plummet, bullish bets are out -- are over exceeding bearish bets. that is one sign the market i getting a little more speculative activity. if we switch up the charts, we will see this is coming at a time when the nasdaq is trading in thin air. treating 19%0 is above its 200 day moving average. that is the highest since january 2010. romaine: our thanks to everyone on the markets team. we have quite a few earnings crossing the wire. let's see what is out first. a company is thinking -- is
sinking after hours. the company said revenue would fall a percent on the year. now saying that is going to be a 10% drop. the company is providing those fourth quarter numbers. one 28 to 136. the estimate was one of -- was for 140. let's move on to applied materials, which is the chip equipment maker. the stock already at a record high even before reported earnings. second-quarter net sales will be about 4.3 $4 billion. on the top line, it beats with it forecast. analysts were looking for $.92. first quarter better than expected. the stock is down a tens of 1%. that might be tied to the fact
the stock was already at a record high before results came in. let's take a look at the real estate listing company. this is a lossmaking company. the loss in the fourth quarter was $.18 a share. it was better than what analysts were looking for, which is a deficit of 12 percent. for the first quarter, it continues to see a loss of $68 million. revenue will be winners 79 million to 170 eight. even the low end of that range is better than the consensus estimate. romaine: a little bit of a mixed bag. slightly above estimates. forecast, theye are projecting -1.5 to -3.5 percent. decline in three q. the estimate was for 2.5. there kind of in the range. we will dive a little deeper to the numbers and let you know how
this shakes out. scarlet: the bar was fairly low for a company like cisco. wondering what you think here. we just had a bunch of mixed earnings come in. you had said a little earlier that buybacks are accounting for a lot of the market. that sounds like news to me for a record market. shawn: i think it is just pushing the record higher. we are not talking about what the supply chain disruptions are going to be in china. they could be a problem for next quarter. the market is going to move higher because people feel good. it is just going to continue to rally. if you are being really protective of your money, should start thinking about pulling some of the chips off the table, looking for places to hide. look people will always for the extra 3% to 5% at the top.
the rally has been amazing. mike, jump in here because where you get the courage to stay in the market right now? get to this idea at some point where you look at valuations. you look at the economy, which is doing fine, but it is not going gangbusters either. we are all just relying on what jay powell does? tricky tos kind of use valuations as your exit point. they are high. they can get a lot higher. the point about the liquidity, you have to start wondering what are the risks to liquidity? if you think it is all jerome powell and the repo operations -- i know there has been endless debates about whether that is actually helping. they took the yields on cash products. they took them from a positive real yield to a negative real
yield. that is pretty important for helping to boost this rally because if you look at money market mutual funds, they were collecting money week after week after week. that has tapered out. it looks like it might be rolling over a little bit. any hint they are going to wind up these repo operations -- regardless the evidence that you can prove they are reducing the market, they would hit the confidence and cause people to pull back a little bit. what would cause companies to start scaling back on buyback? higher interest rates. a long-term damage to profits. something that seems it is longer. those are the risks i would look out for. you have to stay in. shawn: and the political landscape as well. you start to look at buybacks. at some point, there is going to be a push back on what
government -- on what companies are doing with their money. they are driving up there pe. they are creating an -- a scenario. it is working great. you have assets continuing to go up. you're starting to see it look at davos. there is social pushback going on. you're going to have wage pressure at the bottom. that is going to be a much longer term issue, which takes that cycle and reverses the cycle. scarlet: are you saying you see inflation? shawn: it is slowly starting to move in. i think we get to 3.4 by the end of the year. as the wage pressure starts to work its way in, it will start to have ramifications. pe of 20, 21, 22, who cares? it will have a long-term systemic problem. romaine: are people prepared for
that? shawn: not at all. scarlet: we do have some breaking news. mgm resorts announcing a succession in transition plan. the ceo will be stepping down. continue to he will serve in his current role until a successor is found. so much for a succession plan. they have just said he is stepping down. he is going to lead the company through the transition. mgm resorts shares are down by 3.9%. we have -- companies report. this is not one of those that we were looking for a change in leadership. romaine: he has been there for about seven or eight years. for a ceo, i esis never good whe stepping down without a successo that is a good point. i think we have to leave it there. scar we have to move on
of how u.s. stocks closed. optimism about the mobile economy takes stocks to a global high. >> the question is, what did you miss? romaine: jay powell says low rates are not really a choice anymore. and in unlikely duo. softbank opens the door to making some changes. and, losing ground. bed, bath & beyond's new cal gets off to a rough start. we will talk to one analyst who says the turnaround appears to be out of reach. scarlet: we have some breaking news. mgm, which we are waiting for to reporter earnings, has announced a ceo succession and transition plan. the ceo is stepping down. in the meantime, he is going to continue to serve in the role until a successor is appointed.
he has been ceo for the l been e company for a lot longer than that. stock is higher by 3.9%. we will continue to look for everything and figure out what is going on. we want to go back to one of the top stories of the day, which is the coronavirus fallout. steve mnuchin said the implementation of the phase one trade deal has slowed slightly because of that epidemic. experts are still waiting to hear if they will be allowed by china to go into the outbreak's frontlines. let's bring in sophie in hong kong. but start with steve mnuchin's comments. how did that compare with what we thought was going to happen? marks: plenty of question lingering. he said he spoke with jay powell
about the potential impact of the coronavirus. he sees that playing out in china. for the u.s. economy, he does not see repercussions going beyond 2020. he did note in the senate finance committee hearing that two of the four weeks of data is needed for an evaluation can be made. this when companies such as carnival are fighting pressure on earnings and more flights are being canceled given the potential exposure to the outbreak. we have written now that a lot of investors are looking forward to the future and starting to buy the dip created in the market. what to those investors still have to fear? sophie: with the implications of the supply chain, that is what
we are still trying to understand given that factories have suspended operations on the mainland with several slowly coming back online. started onissan only the 17th. one million workers will be back to work by then. we still have to understand what the knock on effect will be for parts supplies, which has seen companies in europe try to grasp how they will manage that potential impact. along with the supply chain risk , you have the demand side of the equation. the chinese consumers, a big factor to consider. you have china's policymakers looking to help boost that. theyg they will do what can to stabilize economic activity. romaine: that is sophie of bloomberg news out in hong kong. from new york here, this is bloomberg. ♪
romaine: the softbank founder is opening the door to making some of the changes championed by activist investor paul singer. this after the company reported losses in the second quarter. we are joined by matt monk. we kind of heard what paul singer had to say. we heard today or overnight from what mott poc -- from what my yoshi son had to say. it did not sound like he was conceding a lot. matt: i would say he has striking a conciliatory tone. he was paying lip service to some of the things singer wants.
he nodded to the fact we might address some of these things. he is saying the right things elliott wants to hear. he describes singer as his important partner. he described himself as the largest shareholder in softbank. money: elliott puts more to work than anybody else. he is the most feared investor in the world. say he would do exactly what he wants. do you think what he did today was enough to ease some of those tensions? matt: we are in the early stages. ago.ews broke a week i think he did that because he knew earnings were coming out. it is going to take several weeks for them to continue engaging. was it enough today? i did not know if we were going to see that on the buyback. he said we are open to the idea of buybacks. is time and size of that
going to depend. in terms of transparency, he said we are open to having some transparency in the vision fund, but he will not disclose the privacy of the companies. he is his own guy. he is going to do what he is going to do. scarlet: some strong personalities. elliott is a feared shareholder here. to work outable deals with the companies it has targeted in the past or does it always tend to get adversarial? matt: somebody wrote about him the other day and called him the boss who tells bosses what to do. when he puts his weight behind something, he often gets his way. i expect things are amicable. i probably suspect he will get a board see or two. if things go that way, it is going to be another win for him. romaine: through all of this, there was some relative good news coming out of softbank. they didn't see a little bit of
return off of the uber -- they return offe of the the overinvestment. his narrative is the tide is turning. this is some kind of transitory hiccup for the company and all of the investments will pay out in some sort of aggregate form. matt: that is his thing. he is the vision man. he wants people to take the long view. the stock is up to perception romaine: he is putting a lot of his own money. matt: that is the point i want to get to. he has curbed his ambitions on the vision fund. he did not say exactly how much. he said softbank might put its own money toward the vision fund investments. that could be a potential point of contention with elliott. it is kind of a bold thing for him to do. lost $2sion fund just billion last quarter. the guy has chutzpah. romaine: we conduct -- scarlet: we can definitely say
that. we have some breaking news we want to recap. moranchairman and ceo jim announcing plans to step down before his contract expires. let's bring in chris. we were waiting for mgm tour report -- mgm to report results. we got this news that the ceo is stepping down. what do we know so far? chris: he has been ceo since 2008. he is probably the longest running of the nonowner ceos. sheldon adelson has been on the caesar'ss company, but , all of the big guys have put in new ceos. he has just completed the transition under pressure from activist investors for years to boost the stock price. they have sold almost all of their marquee assets to third
parties. they will continue to manage them under this asset like strategy. there is no doubt that he has been under pressure in recent years. sonali: how do the more recent coronavirus fears add to the pressure on the company and whoever might take over? all of the casinos are closed for 15 days. it may be longer. that is unprecedented. the resorts said they are losing two and a half-million dollars a day. that is a huge drag. there are asian players who come to las vegas who are also not coming. those are big sources of income. the casino industry is definitely taking a hit from the coronavirus. company isat kind of he leaving behind once he ultimately leaves? is this the kind of thing were a
new ceo can come in and pick up where he left off and we are going to seeing? >> it is a completely different company and untested. big projects.ome the city center and area casino. thatbillion property opened in the last great recession. still he marquee property on the strip. made a big push emphasizing sports and entertainment. now, he leaves the company with no real estate owned. it has become a licensor of its brand. the new ceo will deal with that. romaine: great to have you. chris out in l.a.. from new york, this is bloomberg. ♪
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a number of daily cases appears to be stabilizing. peopleplaced 60 known under a lockdown. the united states office released a list of more than one of the companies that violated rights by operating settlements in the west bank. said theyrson identified business activities of particular concern. >> it stems from an earlier from the human rights
council. given the well-established in the occupied territory. data are impacts from the rights of the palestinian people have been built and continued to be built. he said he was proud of the israeli businesses and any points is not advanced peace and build confidence between the skies. >> global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. >> lets you get -- let's get you
back to some of the earnings. the companych sells, this will be the second .uarter rangeactually within the of about 2.5%. indication --ting >> marginally higher in after-hours trading. the sales forecast for this quarter beating the average analyst estimate and according to ian king, a reporter in san forecast, the customers have started to return to spending more on their factories.
for now, we are seeing stocks at a gain of three tencent 1%. -- sox at a gain of 3/10 of 1%. that the fourying q revenue is going to be a little lighter than what analysts were expecting. adjusted eps for the fourth quarter, the estimate on average was one dollar and $.40. with bernie sanders victory in the new hampshire primary, investors are trying to consider how the stock market would fare if he were the president curated
and member when it looks like elizabeth warren picking up steam, last year the market started to falter, today's victory shows yesterday that the markets do not seem to care as much given the record highs. you challenge the conventional wisdom. explain your thinking. >> the narrative that bernie sanders would wreck the market because he was a socialist, my personal view is he is not likely to take those dramatics because he does not have a popular support to do those things, but what he can do is ramp up spending on the big projects he wants, college, housing, health care for all and i don't think he will be able to do that. i think he will have to run a
bigger physical desperate -- fiscal deficit. ultimately, the matter of public policy, but i think we can say it is a boost to the economy, good for corporate earnings. stock market the last couple years, it has been earning. >> obviously, a lot of the market run we had because of earnings growth, the concern has been over the last year has pretty much been multiple expansion. time and time again, you need to see it done in the right place in order to keep the economy .oing for
america, obviously concerned about bernie sanders. are they merck concerned -- more how corporatet america in terms of taxation? >> there is certainly a concern because it is not going to be .pending to see what's good for the economy at large. to the extent that he is serious , it ishe green new deal not necessarily mean it is bad for the economy as a whole because one of the things is the economy is doing great in the market is doing great and the energy sector and the financial sector has not done that great, so you could have individual
the retailer here a little bit of a rocky start. some numbers showed contraction there and here, talk little bit more about it, the managing -- luke at the capital capital markets. anthony, i understand the criticism of these numbers and the criticism of early efforts. he has only been on the job a few months. are we sort of throwing the towel on him quickly? i think a lot of the result are through no fault of their own. having said that, we knew the fourth quarter would be bad. i don't think we thought it would be nearly this bad, so i think part of the reaction is
this guy could be the second coming of sam walton, but maybe it is too far gone and maybe no one can turn around bed bath & beyond. belowht now it is trading . we think it will get a lot lower. what is the floor on this stocks? estimatesower my based off of this announcement. in terms of the floor, it could be significantly lower. things always get worse before they get better and you get to the situation where this thing could go to zero, then maybe that is the floor. maybe the floor is zero. -- customers have come to expect that and i compare it to
ron johnson took over and brought it to everyday low pricing. the customers would not respond. >> i think you hit the nail right on the head. at some point, they are going to need to retrain their customers, off and not about 20% funny you bring up because that is one of the examples you're thinking of. , he cannottsourced get turned around. >> are there successful examples
of companies breaking the discounts? withink a lot has to do marketing and munication -- and communication. you're not always getting a fair deal at this price. .ex i have my coupon thanks a much, research analyst in chicago. let's look at the charts and look.eek, taking a ignore. hard to thank you for joining.
great to have you here. let's start out with your s&p 500 chart. >> this gives us a little caution. internally, momentum is starting to contract. >> the far side has started to the verge -- diverge. do look back, if morehing works, it can be 3030 then 50-50. >> does it mean it will feel like a correction very quickly or gentle blowback? think
>> i believe it is not really a choice at this point. for central banks, for markets. it has been a position we have known for a long time in the cd 10 year yields below and you see all the records being broken --oss and you have to credit scratch your head and say what do we do? >> what kind of position do you see as a result of this? >> we were talking about how in marketope -- euro-dollar ist least rate cuts, so it reinforcing the narrative that the fed is not going to hike. if anything, they are going to easingnd it will be more
. >> how do we factor in the longer term ramifications? >> it is interesting. everything seems stretched and it is a real question of where you go from here. frome have been trending high-yield bonds. all of the markets that capture more and more yield and the problem right now is there is no clear catalyst. there is no clear catalyst that sol create more value and you're left with this idea of let's keep piling the trade because it will not get any better.
a homeowner, it is pretty good to read it we were talking about refinancing the bloomberg beach house. for homeownerst is they had easier ways to refinance. all the tech companies coming in and with a quick click, you can check to see if you qualify and within a few weeks, you can effectively refinance at a cheaper rate, so there is no -- there are some savings, but if it it -- it is tough out there a few want to save the fixed income market. >> have i written a column about that every week of my life #>> yes or it has been a complete change. >> that does it for what you